World Trade Talks End in ''Milestone'' Agreement
Agreement could inject $3 trillion into the global economy, says WTO head
GENEVA, Switzerland - 08/01/04 - In a landmark agreement reached early yesterday morning, the 147 members of the World Trade Organization agreed on a framework for future talks on reforming trade in agriculture, manufactured goods, and services and streamlining Customs procedures.
"Obviously, much work needed to be done. We have laid out a map for the road ahead. And next we'../eWebPhotos/worldtrade1.jpeg" align=left vspace=15 border=0>development," said US Trade Representative (USTR) Robert Zoellick in a briefing with reporters.
Disagreements about agriculture and subsidies paid to farmers by developed nations have been major sticking points in the ongoing negotiations, and this agreement produced "historic reforms," the USTR said.
Supachai Panitchpakdi, the director general of the World Trade Organization, also praised the agreement after the long evening session, saying the agreement could pump as much as $3 trillion into the global economy.
"We took a risk and it worked," said European Union Trade Commissioner Pascal Lamy. "It was worth it for us and for the developing countries."
European Union export subsidies total three or four billion dollars annually, with the biggest impact found in the beef, dairy, and sugar sectors.
German Economy Minister Wolfgang Clement said the 147-member World Trade organization (WTO) had grasped the opportunity and achieved "a substantial step forward in world trade talks."
French Agriculture Minister Herve Gaymard told France Info radio the agreement was "a good and balanced accord that consolidates the European common agricultural policy and does not question the reforms decided a year ago."
Speaking for the UK, the world's fourth largest economy, Trade and Industry Minister Patricia Hewitt described the accord as " a crucial step on the road to delivering a trade round that will benefit all of us, especially developing countries.
"It is incredibly important for Canada and for the world," Canadian Trade Minister Jim Peterson said. "We have a historic opportunity to get rid of agricultural subsidies and open up the world, particularly the developing world."
"Generally speaking, the framework [agreement] is not bad, though the developing countries are not fully satisfied," Sun Zhenyu, China's ambassador to the WTO, told China's official Xinhua News Agency in Beijing.
Sun did not elaborate, but said China had played a "positive role in promoting the negotiations."
Foreign Minister Celso Amorim of Brazil, who has become a spokesman for the developing world on agricultural issues, said the new accord was "a milestone for farmers who could never compete against the rich world's subsidized crops and who were going out of business by the millions"
"The agreement, he said, "is the beginning of the end of subsidies. It is a rare combination of social justice and trade coming together."
Just a few months ago many trade analysts were wondering whether the negotiations could be put back on track in 2004, particularly during a US election year.
The negotiations broke down in Cancun, Mexico in September 2003 as a number of developing and industrial nations failed to show the necessary flexibility to strike a deal.
The agreement on export subsidies was particularly critical for many developing countries that have found the prices of their farm product undercut in world markets as farm goods from more developed countries have flooded world markets.
Although countries will still be able to provide food aid for humanitarian and development needs, one of the more challenging areas for future negotiations are which programs will be considered trade distorting.
The Geneva talks were specific in a few areas.
The US agreed with other wealthy nations to a 20% cut in some of its farm subsidies, which was seen, in part, as an effort to match the European pledge.
In the US, the cuts could include some of the $19 billion given annually to farmers who raise cotton, rice, corn, wheat and soybeans.
But during the all-night talks, several developing countries questioned whether there would be an overall reduction in American subsidies or simply shifting subsidies from one category to another.
"The cuts are important but there's a fair bit of people promising not to do something that they're not doing anyway,'' said Jim Sutton, a New Zealand delegate.
The US also resolved an emotional issue left over from the Canc?lks by reaching an agreement with four impoverished West African nations - Benin, Burkina Faso, Chad and Mali.
They had pleaded for relief from subsidized American cotton that they said had driven down world prices and destroyed the livelihoods and the lives of thousands of their farmers.
Under the framework, the US agreed to speed up its reduction of subsidies for cotton, which were recently declared illegal by a WTO ruling. The agreement also calls for help in finding more development aid for those African countries.
In return, the countries without subsidies agreed to make changes as well.
The highest agricultural tariffs will be cut more deeply than the lowest ones, and countries with state trading enterprises - like Canada with its wheat board - accepted new restrictions on how they sell their commodities.
The politically powerful EU Farm Union - composed of the Committee of Agricultural Organizations in the European Union (COPA), and the General Confederation of Agricultural Co-operatives (COGECA) - said the new agreement "protected EU agricultural policy."
The group - which represents 11 million farmers and about 30,000 cooperatives in the European Union - called on European negotiators to make sure it stayed that way in any future talks.
Many difficult questions were left unanswered until the next gathering of negotiators.
A group of wealthy nations including Japan, Norway, and Switzerland agreed that their biggest tariffs should be cut the most.
But they were able to persuade the WTO to postpone making decisions about how much the tariffs would be reduced, with a special eye toward tariffs they impose to protect what they call sensitive products.
Those include rice for Japan and dairy products for Norway and Switzerland. "We maybe have mixed feelings, but we said yes," said Masato Kitera, a Japanese delegate at the talks. "We will negotiate the level of tariffs later."
A number of US-based trade organizations applauded the agreement including the Washington, DC-based National Foreign Trade Council (NFTC), which said in a statement that "moving forward with the text is vital to achieving concrete progress on the Doha Round?and it will allow the negotiations to evolve to the next level of detail and build momentum for a successful and timely conclusion to the trade talks.
According to the trade promotion group, "It is clear from the ambiguity of some elements of the text that important and difficult decisions have been deferred, but agreement on the text will nonetheless demonstrate the commitment of WTO members to advancing multilateral trade liberalization and a rules-based trading regime that generates growth and opportunity for all its members."
Several other groups have come out in support of the draft agreement including the National Association of Manufacturers (NAM) and the Coalition of Service Industries (CSI) which qualified its advocacy by saying that it still would like to see WTO negotiators "agree on a date for countries to submit revised offers to open their domestic services markets."
The agreement holds out hope for a final pact that would cut tariffs on agricultural and industrial goods, slash farm subsidies in rich countries and make it easier for financial and service industry firms to work across borders.
In keeping with the tenor of election year politics, the US Democratic Party - fresh from nominating Massachusetts Sen. John Kerry as the party's nominee for the presidency at its convention in Boston - immediately belittled the framework, saying it was "too little and too late" for the American economy.
"After almost four years, it appears that the result is to simply identify for our trading partners the barriers they have had in place throughout the years of this Administration to US exported manufactured goods," said Representative Sander Levin (D-MI), ranking minority member of the House Ways and Means Trade subcommittee.
"In the face of 2.5 million jobs lost, we can and must do better for hard-working Americans," he said.
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